Does This Overlooked Growth Stock Still Have Value?

Boston Beer stock has nearly tripled in value the last 12 months

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The Boston Beer Company, Inc. (NYSE:SAM) includes Samuel Adams, Twisted Tea, Truly Hard Seltzer, Angry Orchard Hard Cider, Marathon Brewing, Wild Leaf Hard Tea and Tura Alcoholic Kombucha, as well as a host local craft beers across the country.

While most of earnings season has wrapped up, there are still some stragglers left to report. Boston Beer Company will report its fourth quarter results after the market closes on Wednesday, Feb. 17. Analysts project that SAM will report an earning per share (EPS) of $2.62.

SAM beat earnings expectations on 50% of its quarters reported in 2020. That resulted in two huge post-earnings pops of 18.8% and 25.7% in October and July, respectively. In the last eight quarters, the stock has averaged a post-earnings move of 10.1%, regardless of direction. For tomorrow, the options market is pricing in a slightly smaller-than-usual post-earnings move of 9.6%. 

SAM has already raced out to a 17% gain in 2021, and has nearly tripled in value the last 12 months. Pullbacks in the last six months or so have always seemed to settle above $900. Just last Monday, SAM gapped to a record high of $1,180.00.

From a fundamental point of view, the main issue with SAM is its extremely rich valuation. Boston Beer Company stock currently trades at a price-earnings ratio of 83.11 and has a forward price-earnings ratio of $57.80. However, when looking at all the other aspects of the company, it is clear why SAM is valued so highly. The Boston Beer Company has shown an incredible growth rate on both its top and bottom lines. SAM has increased its revenue by more than $700 million the past three years, with $300 million of that chunk being in the past year, bringing its total revenue to $1.576 billion. The company has also increased its net income by more than $62 million in the past 12 months, pushing its total net profits just above $172 million. Overall, Boston Beer Company remains a promising growth play despite its recent growth and rich valuation.



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